Settlements residue arises in the National Electricity Market (NEM) because the amount paid by market participants to AEMO for spot market transactions will usually differ from the amount paid by AEMO to other market participants for spot market transactions.

There are two types of settlement residue auction.

Intra-regional settlements residue:

Settlements residue relating only to settlement transactions within a region.

Not listed for auctions, but distributed to, or recovered from, the appropriate Transmission Network Service Providers (TNSPs).